Presumably people can move and do their transactions these days while they are ‘wallet free’. Technological advancements are facing new waves in various sectors because of the pandemic and fintech is no exception. People are more likely to use mobile payments and digital transactions after the coronavirus outbreak. At present, people choose to do digital transactions and tend to solve other affairs associated with money management in a digitalized way, which has resulted in significant advancement in the Fintech industry.
In 2020, more than 92 million people have already used mobile payments. This number is predicted to rise steadily until it reaches 125 million by 2025. Even after life returns to “normal,” some of the pandemic-induced behaviors, such as the way people access banking services, pay bills, and perform transactions, are likely to withstand. Around 99 percent of Gen Z and 98 percent of millennials use a mobile banking app for a broad range of functions. To pay bills and conduct regular financial operations, people are increasingly relying on e-transfer banking services.
Financial technology is a new development that is gaining favor around the world by replacing traditional financial services in a variety of areas, including payments, wealth management, banking, electronic commerce, social commerce, and more. Let’s look into some of the significant trends that are impacting and will continue to have more influence in the future.
The number of consumers making mobile payments was about 900 million before the pandemic, which rose to around 1.48 billion users in 2020. Mobile banking services, together with technical improvements, allow customers to undertake banking or financial activities more generally; enabling the payment of public utility bills in banking apps makes people use more of mobile banking systems. According to Google’s report , about 6 out of 10 users opt for finance apps on their mobile phones to check their investments. Mobile banking is especially popular among small and medium-sized businesses (SMEs) because of cost efficiency which helps in business growth. Also, mobile banking reduces a bank’s costs by providing transactions that are ten times cheaper than ATM transactions and saving on the costs of operating bank branches.
Digital banking is also becoming a method to access communities and solutions that are targeted to customer specific needs. Customers will be satisfied and loyal to financial institutions if quick service quality being provided by mobile apps. Customers may use mobile banking to keep track of their finances- including checking balances, receiving account alerts, making check deposits, transferring money instantaneously, and even more. For added security, several mobile banking apps now allow people to log in using biometric authentication.
City Bank has implemented a Finance Global award-winning Internet Banking Solution with City Touch, developed by us at Brain Station 23, keeping it ahead of the competition in the digital banking industry. This internet banking software and mobile application brought in features like transaction facilities, fund transfer using email, scheduled and recurring transactions and many more.
Autonomous finance employs artificial intelligence (AI) and automation to provide personalized, optimum financial services experiences. Autonomous finance relieves customers of the stress of financial decision-making by adopting artificial intelligence algorithms to automate the process. Customers can use this technology to make immediate judgments about their finances, such as where to invest their money or how to authorize a loan with lower interest rates.
Organizations that are in the growing stage assume customers will benefit from enhanced financial welfare and proactive customer service. As a result, they are more likely to have developed a technology foundation with digital operations and automated processes than stabilizing organizations.
Artificial Intelligence & Machine Learning
Artificial Intelligence and Machine Learning both are playing vital roles in fintech industry, such as improved money management, predictive analytics, real time decision making and many more.
Organizations are currently using unique artificial intelligence algorithms and cutting-edge machine learning approaches to analyze data. These data help in improving business as well as saving costs. By gaining a better understanding of business data and customer behavior, AI solutions are assisting in the automation of the process of profiling clients in milliseconds depending on their risk profile. Organizations can also swiftly detect patterns and recognize fraudulent operations by using various machine learning techniques.
24/7 customer support is another important service fintech companies are providing using AI chatbots. To get a premium hybrid-bot customer service experience, 43 percent of millennials would pay. This indicates how associating technologies in traditional systems upgrades business and attracts new age customers.
With a CAGR of 23.17%, globally, AI in the fintech market is predicted to make USD 26.67 billion by 2026. Hence, more advancements in these technologies are expected to boost the fintech industry over time.
RegTech (Regulatory Technology) is the use of cutting-edge technology to help businesses better manage regulatory compliance. Artificial intelligence (AI) and machine learning (ML) are used in regulatory technology to automate typical operations in compliance departments.
RegTech operates by automating repetitive processes such as real-time monitoring of transactions, risk, and regulatory changes, reporting, and alerting compliance employees to potential fraud conduct. Companies can establish a competitive advantage over their competitors because of this cost and time efficiency.
The use of regtech not only benefits the organization directly, but it also benefits their client base. The existence of a well-known and safe regtech will act as an assurance because most consumers are hesitant to give their personal information with an unknown third-party app. The global regtech market is expected to expand at a CAGR of 21.27% and likely to reach around USD 33.1 Billion by 2026; thus pave the way for more association in fintech sector in coming days. Fintech providers, legislators, and regulatory authorities are expected to work together to create a safer environment in order to address any threat.
Open banking is the process of several financial institutions sharing consumer data and information across a secure network. To do so, the consumer would then acknowledge a set of terms concerning the security and privacy of their data. Open Banking refers to the ability to create new digital businesses and ecosystems using bank APIs. Fintech involves financial infrastructure and requires credit unions and community banks. Customers can get a consolidated picture of their bank accounts through open banking agreements, making account administration easier and efficient. Open banking presents advantages like making farsighted decisions effortlessly, digital swiftness, improved collaborative chances and more. A study by Juniper Research, found that the value of global payment transactions aided by open banking will exceed $116 billion in 2026.
Blockchain is a distributed digital ledger that contains any type of data at its core. Cryptocurrency transactions, NFT ownership, and DeFi smart contracts can all be recorded on a blockchain. Transparency, cost-cutting opportunity and traceability are all benefits of blockchain. It enables financial institutions to bypass third parties during transaction processing, securely store data, and create a transparent and fraud-free ecosystem. Two parties in a transaction can use blockchain to confirm and finish a transaction without the need for a third party. Because each transaction is recorded in blockchain for its entire existence, there is already an audit trail for people to see and validate the legitimacy of their asset.
According to Statista, in 2021, global spending on blockchain result is projected to reach 6.6 billion dollars. Blockchain has been effectively offering promising technologies to the FinTech business for the past 12 years and awaited to do so in future.
Lendly is a blockchain proof of concept (POC); developed by Brain Station 23, a solution that makes money lending and borrowing process easier via trusted transactions regulated by a consortium. To regulate the network and manage the ledgers, Lendly introduces a consortium network of Non-Banking Financial Institutes (NBFI), which can even be government agencies. By introducing smart contracts, users may increase user and system trust.
The strategies financial service providers use to secure themselves and their clients must evolve as financial services become increasingly digital. Introducing biometric security is a part of that digitalization. Biometric technology analyzes physiological parameters like fingerprints, iris patterns, and facial features in order to identify a person. Biometric systems are extremely difficult to deceive since they rely on the analysis of many data points related to specific users.
Smartphone technology is being used for POS (Point of Sale) purchase now a days and ATMs are starting to integrate biometrics as a new method of authentication.
Using biometric authentication in mobile banking apps is a remarkable approach to combine convenience and financial security for customers. Considering that introducing, The AI powered eKYC which is the simplest way for any financial institution to engage new consumers. This solution uses biometric verification, including face and fingerprint verification for security purposes.
Biometric authentication appears to be an absolute must-have for banks in the foreseeable future, especially given the growing popularity of mobile banking. By 2023, mobile biometrics will be used to authenticate $2 trillion in in-store and distant mobile payment transactions, according to Juniper Research.
Consumers now tend to manage their money and businesses online and they are less willing to put up with the relatively slow rate and complexity of traditional financial services. We’ve seen a range of new trends develop on the horizon as a result of the epidemic and the global economic uncertainties it generated. Fintech is gradually becoming a part of every division within an organization as it helps to digitize legacy procedures. The sooner people and businesses adapt to the fintech trends the better these trends will flourish.
Ready to consider fintech solutions? Contact us at Brain Station 23 to find out whether we have got the technical solution for your bank or financial institution.